(Not Blood for Oil) U.S. says Libyan rebels to start oil exports soon - Oil Prices Drop

From [HERE] and [HERE] and [HERE] Stock markets in Europe and the U.S. were helped Monday by a drop in oil prices as Libyan rebel forces made gains against the regime of longtime leader Moammar Gadhafi. The United States on Monday gave a green light to sales of Libyan crude oil from rebel-held territory, giving a potential boost to forces battling Muammar Gaddafi. A U.S. Treasury Department official said Libyan rebels would not be subject to U.S. sanctions if they avoid entities linked to Gaddafi's regime, which would allow them to sell oil under their control.

"The rebels are not part of the government of Libya. They are not subject to the sanctions," the official said.

But the rebels, who retook a number of oil fields and terminals in eastern Libya over the weekend and were advancing west toward Gaddafi's hometown of Sirte, must first establish clear lines of control and payment systems that do not involve Libya's National Oil Corp, its central bank nor any other government entity, the official said.

The rebels have taken control of two key port towns and indicated they would restart crude exports within weeks. That affects markets because Libya accounts for a little under 2 percent of the world’s daily production.

The rebels’ advance in recent days has come in the wake of international airstrikes against Gadhafi’s military forces and has encouraged investor hopes that the regime may soon fall.

That prospect was reflected in the oil markets. A barrel of crude as traded in New York was down $1.74 at $103.66 while the equivalent Brent rate in London fell 74 cents to $114.69.

Falling oil prices encourage traders that the global economic recovery will not be derailed by the tensions in the Middle East and North Africa as well as the fallout from the devastating earthquake and tsunami in Japan earlier this month.

Oil fields in rebel-held territory in Libya are producing between 100,000 and 130,000 barrels a day, and the opposition plans to begin exporting oil "in less than a week", a rebel representative said on Sunday.

"We are producing about 100,000 to 130,000 barrels a day, we can easily up that to about 300,000 a day," said Ali Tarhoni, the rebel representative responsible for economy, finance and oil, at a news conference.

He said the rebel government had agreed an oil contract with Qatar, which would market the crude, and that he expected exports to begin in "less than a week". Tarhoni said he had signed the contract with Qatar recently and that the deal would help ensure "access to liquidity in terms of foreign denominated currency".

"We contacted the oil company of Qatar and they agreed to take all the oil we export and market that oil for us," he said.

"We have an escrow account... and the money will be deposited in this account, and this way there is no middle man and we know where the money is going."

Tarhoni said the main obstacle to exporting oil would be finding shipping companies, and other representatives from the Provisional Transitional National Council opposition body have said they are having difficulty finding companies to insure oil tankers taking exports from rebel-held territory.